Simple and Compound Interest Calculator (SI vs CI)
Simple vs compound interest, compared side by side. Free, no sign-up.
Simple Interest
Interest: —
Total amount: —
Compound Interest
Interest: —
Total amount: —
Extra earned with compounding: —
How to use the interest calculator
- Enter the principal in rupees, or drag the slider.
- Enter the annual interest rate in percent and the time in years. Decimals such as 7.25% or 2.5 years work.
- Choose how often interest is compounded: yearly, half-yearly, quarterly, monthly or daily.
- Compare the simple interest and compound interest cards. The line below them shows how much compounding adds.
Simple vs compound interest formulas
Simple interest
SI = (P × R × T) ÷ 100, Amount = P + SI
Interest is earned only on the original principal, so it grows in a straight line.
Compound interest
A = P × (1 + R/(100 × n))^(n × T), CI = A − P
Interest is added to the balance every period and then earns interest itself.
Worked example
₹1,00,000 at 8% a year for 5 years:
| Method | Interest | Total amount |
|---|---|---|
| Simple interest | ₹40,000 | ₹1,40,000 |
| Compound, yearly | ₹46,932.81 | ₹1,46,932.81 |
| Compound, quarterly | ₹48,594.74 | ₹1,48,594.74 |
Exam shortcuts for SSC, bank and CSAT papers
- Half-yearly compounding: halve the rate and double the number of periods. 10% a year for 1 year compounded half-yearly is the same as 5% for 2 periods.
- Successive-percentage method: 10% compound for 2 years is 10 + 10 + (10 × 10 ÷ 100) = 21%.
- Rule of 72: money roughly doubles in 72 ÷ R years at R% compound interest, so about 9 years at 8%. It is an estimate, not an exact answer.
- SI doubling: under simple interest, money doubles when R × T = 100, so 12.5 years at 8%.
Common mistakes
- Using the annual rate per period. With quarterly compounding, the rate per quarter is R ÷ 4.
- Reporting the amount when the question asks for the interest, or the other way round.
- Assuming CI is always higher. For less than one compounding period it is not.
Key facts
- Simple interest grows linearly with time; compound interest grows exponentially.
- For the first compounding period, simple and compound interest are equal.
- The effective annual rate for rate r compounded n times a year is (1 + r/n)^n − 1.
Frequently asked questions
What is the simple interest formula?
Simple interest SI = (P × R × T) ÷ 100, where P is the principal, R is the annual rate in percent and T is the time in years. ₹50,000 at 8% for 3 years earns ₹12,000.
What is the compound interest formula?
Amount A = P × (1 + r/n)^(n × t), where r is the annual rate as a decimal, n is the number of compounding periods per year and t is the time in years. Compound interest CI = A − P.
Does compound interest always give more than simple interest?
No. Compound interest equals simple interest for the first compounding period and is higher after that. If the time is shorter than one compounding period, for example 6 months with yearly compounding, CI calculated with this formula is slightly lower than SI.
What is the difference between CI and SI for 2 years?
For 2 years with yearly compounding, CI − SI = P × (R/100)². For ₹10,000 at 10%, the difference is ₹100. For 3 years it is P × (R/100)² × (3 + R/100).
How does compounding frequency change the amount?
More frequent compounding gives a slightly higher amount at the same annual rate. ₹1,00,000 at 12% for one year grows to ₹1,12,000 with yearly compounding and about ₹1,12,683 with monthly compounding.
Is this interest calculator free?
Yes. It is completely free with no sign-up, and all calculations happen in your browser.